Abstract
Overview
Introduction
Examines the cost to the UK life and pensions industry of poor policy
persistency and rising lapse rates. Utilises in-depth primary research to
assess strategic options available to life companies and the steps they can
take to improve retention rates
Scope
- Uses FSA persistency data and premium information from the ABI to assess
the cost to the industry of poor customer ownership
- Examines the interaction between customers and their advisors and assesses
ways in which providers can be part of this client relationship
- Identifies strategic actions that providers can implement to improve their
levels of customer ownership
Report Highlights
Datamonitor estimates that policy lapses cost the industry an equivalent of
14% of the total new business premium inflows between 1998 and 2002. Primary
research suggests that since the last FSA persistency survey was carried out
lapse rates have continued to rise, therefore the industry needs to act
quickly to reverse this trend.
A key reason for poor retention levels in the market is the remuneration
through commission rather than fees. An over-reliance among IFAs on upfront
commission for income rather than fees or even trail commission leads to high
levels of churn.
Reasons to Purchase
- Assess the full implications of falling persistency rates and what the
true cost is to the industry.
- Identify those clients who are not being fully serviced by their IFA and
where the opportunities lie for providers to increase ownership
- Identify strategic options that life companies can employ to improve
retention & cross-selling opportunities & how these strategies can be
implemented
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